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Acct412 computer project question 5

Acct412 computer project question 5 - investor or the...

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5) A) The effects of alternative investment accounting methods on the parent’s trial balances and the final consolidation figures are different depending on the method that was used. The methods that can be use are the equity method, the initial value method, and the partial equity method. Depending on the method that the company used, the investments are recognized at cost but the income will be assessed differently either increase or decreases after acquisition. B) Retained earnings did not change under the three different methods of the alternative investment accounting method. The investor will recognize income as it was earned by the investee. It will follow the accrual basis for recognizing income whether the individual is the
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Unformatted text preview: investor or the investee. The FASB requires that the retrospective method is used when an acquisition is taken place. The investor will copy the financial statements using the equity method. This ensures that the financial statements can be compared from year to year. The financial statements will need to be fashioned the same as the original so that a comparison can be made and will have accurate information for the statements. C) The effects on EPS return on equity, and debt-to-ratios will be different depending on the method used. The impairments for Goodwill changes because of valuation of the accounting method used. Goodwill is tested for impairments along with intangibles that have unlimited useful life....
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